Casino relief bill passes first test

DOVER — A Senate committee on Wednesday approved legislation that would offer Delaware’s three casinos tax relief, the most significant step in regard to casino aid in years.

The bill could be voted on as soon as today after being released by the Senate Finance Committee.

Senate Substitute 1 for Senate Bill 144 would slightly lower the tax rate on slots, eliminate the table game license fee and slash the table game tax rate.

A modified version of a more drastic relief proposal, the measure was crafted after Sen. Harris McDowell, D-Wilmington, urged the governor’s office to work with the casinos to develop a compromise that takes some of the burden off the gambling establishments while not draining the state of too much revenue.

But while the substitute was just filed Wednesday, the concept dates back years.

Sen. Brian Bushweller, D-Dover, and others have been pushing some form of financial assistance for Delaware’s casinos for several General Assembly sessions, although the proposals continually stalled without even getting a committee hearing.

With the state in a better financial situation now than it was over the past three years, casino supporters were hopeful this year would be different.

Delaware’s gambling industry has been struggling due to competition from other states and tax rates executives describe as unduly high. Dover Downs, the state’s only public casino, lost $1.1 million in 2017.

“No business can sustain that for long,” Sen. Bushweller said. “No business can last under those circumstances.”

The bill has bipartisan support.

The measure would generate about $15 million less in revenue next fiscal year and $20 million thereafter, although almost half of that estimated $20 million is contingent on the casinos investing in capital projects.

In addition to lowering the slot tax level from 43.5 to 41.5 percent for Dover Downs and Delaware Park and from 42.5 to 40.5 percent for Harrington Raceway & Casino, it would decrease the table game rate from 29.4 to 15.5 percent and suspend — possibly permanently — the $3 million fee paid for the privilege of holding table games.

Under the bill, the horsemen would receive an additional .3 percent in revenue the first year and .3 percent the next year, and the prohibition on operating casinos on Easter and Christmas would be removed.

Secretary of Finance Rick Geisenberger said the bill could cause a “modest lift” in business for the casinos.

Supporters are quick to note the casinos employ many people — about 4,500, according to Sen. Bushweller — and argue the state places burdens on them no other business has. But opponents protest the casinos are a state-created monopoly and charge that Delaware should not be responsible for keeping them in business.

Sen. McDowell described the substitute bill as an agreement that is fair to all parties, although it wasn’t entirely what at least one casino wanted.

“It’s a compromise. We were actually looking for more … but this is what the state was able to do, so we’re going to accept it gratefully and do the best we can and try not to come back too soon,” Denis McGlynn, president and CEO of Dover Downs, said after the committee hearing.

Dover Downs was aiming for a restoration of the original tax structure, which used a bracket framework similar to income tax. Higher revenue totals would be taxed at a higher rate, meaning the casinos would pay more in boom years and less in bust years.

“It was a sliding scale of slot revenue that dictated what the tax would be and the average in that first year was 22 percent to the state. We’re up to … 43 percent now, so it doubled over that 20-year period,” Mr. McGlynn said.

The General Assembly last touched the revenue-sharing model in 2014, when lawmakers agreed the state would pick up a greater share of slot vendor fees, at a cost of $9.9 million to Delaware’s coffers.

While the substitute bill appears likely to be voted on by the Senate today, Gov. John Carney has indicated he would prefer lawmakers hold the bill until after next month’s financial projections, currently expected to be released May 21.

Sen. Bushweller said he understands the governor’s point but would like to get it done as soon as possible after spending years trying to get relief passed.

He’s not the only one: There was a sense of accomplishment and pride in the room Wednesday as the committee voted to send the bill to the Senate floor.

“I’m going to go get myself a roll of nickels,” Sen. McDowell cracked.

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